Imagine how different
cars would be if people had to pay for them – as opposed to financing them.
Debt – which is what financing
is – allows people to buy more car than they can afford. It hides the
actual cost of the car. It enables the government to impose
costs in the forms of mandates which would otherwise be unaffordable – and so,
objectionable. People would complain in the one language the government
understands.
They would not comply – because
they could not buy.
This would put the brakes on
what seems unstoppable: The endless and accelerating juggernaut of “safety,”
“fuel efficiency” and “zero emissions” mandates coming out of the federal
regulatory apparat. It’s lovely – to a federal regulatory apparatchik – to call
a press conference at which the latest technically feasible “safety” system is
urged upon the public. Air bags that deploy outside of the car, for instance – to
cushion the impact of your car upon the body of a jaywalker, for instance (and
yes, they are actually talking about mandating exactly such a system). It is
another thing if the system in question is something that can’t be folded into
the low monthly payment of a seven-year loan.
Debt financing also enables the
economically irresponsible to drag the economically responsible into the red by
raising the cost of everything and thus making it hard and often impossible as
a practical matter for the economically responsible to avoid financial wastage.
Consider: It is effectively
impossible for most people to avoid driving a car with at least two air bags,
because all cars manufactured for the past 20-plus years have been required by
federal law to have at least that many. Unless a person is willing to drive a
car significantly older than 20 model years (you’d need to go back to early
1990s to find cars without at least two air bags) one is effectively forced to
buy a car equipped with at least two air bags.
The cost of those air bags – of
which there are now usually at least six in
most new cars – is hidden from buyers by spreading out the cost over a lengthy
period of debt-financing. People do
not see – so they do not object. This is not unlike the diabolically clever
business of “withholding” taxes from people’s paychecks; they never actually
have to write a check to Uncle; they never miss money they never actually had
in their hand. Imagine the roar that would emanate if people had to write Uncle
a check each year for the money currently withheld from their paychecks. That
roar would almost certainly result in lower taxes.
Hence withholding.
Hence financing, for the same
reason.
Air bags were a dead letter when
people had to choose to pay for them – and the cost of them couldn’t be folded
into a six or seven year loan. Because – at the time – such loans did not
exist. You generally had to pay for the car over three or four years. Adding 20
percent to the car’s cost – the cost of air bags at the time, when they were
still a la carte options
– could not be discreetly folded into a loan of such short duration. It would
be like trying to hide a brick under a carpet.
The obviousness of the cost and
the impossibility of obscuring it via Methuselean debt financing caused most
people to abstain from buying the air bags – when they had the choice.
Which would be even more the
case today given the six (or more) air bags which are now to be found in all
new cars. . . if people had the choice.
If these were offered a la carte – as
optional equipment and had to be paid for without resort to a loan as long as
most people spend going to high school and college. If that were the case it is
a good bet almost no one would buy them, because almost no one could afford
them.
The thing speaks for
itself.
But because almost anyone
can finance them,
we are all effectively forced to go into debt for them. There is no great roar
of outrage about the imposition of these costs because the costs are hidden
from view. Gradual impoverishment via debt is like old age; they each creep up
on you. A person looks in the mirror one day and notices he is going gray. A
person reaches late middle age and takes stock of his finances and realizes his
net worth is practically nil – but he is living in a “nice” house and driving a
brand new car with six air bags.
And a
back-up camera, tire pressure sensors, LED projector beam headlights, 18-inch
wheels with $150 per piece tires, automated emergency braking, with a
direct-injected/turbocharged engine under the hood, putting the power down via
a nine-speed transmission connected to a viscous coupled all-wheel-drive
system.
Probably, our man would have
bought none of these things – government mandated or not – if he hadn’t been
enabled to do so via the diabolical device of debt-financing. It – more so than
Uncle, who merely uses it toward this end – is responsible for the economic
enslavement of the population. It’s a comfortable enslavement, in the sense
that never before have debtors enjoyed heated leather seats and a great stereo
system. But they are enslaved nevertheless. Because insurmountable debt amounts
to perpetual insecurity. One is constantly sweating money, beholden to a job –
which one may despise – and a particular employer, whom one dreads in the same
way that a galley slave dreads the whip master.
One hundred years ago, the
average person didn’t have access to the baubles – and luxuries – that are now
seemingly everyone’s birthright. The difference then vs. now is that while
there may have only been a simple Model T parked outside of the person’s home,
it was probably paid-for.
And so was the home it sat in
front of.
Its owner may not have had
heated seats – or six air bags. But he had something else, infinitely more
precious.
His freedom.
. . .
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